Apartment Markets: What s Hot, What s Not

Transcription

1 Market Advisory Services Apartment Markets: What s Hot, What s Not NMHC Apartment Strategies/ Finance 1

2 Apartment Units (000) 1Q2000 1Q2001 1Q2002 1Q2003 1Q2004 1Q2005 1Q2006 1Q2007 1Q2008 1Q2009 1Q2010 1Q2011 1Q2012 1Q2013 1Q2014 Market Update More new renters enter the market Net Apartment Absorption by Quarter, Seasonally Adjusted NMHC Apartment Strategies/ Finance Source: 2

3 Jobs Gained/Lost by Month (000) Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Market Update despite generally modest job growth overall Excl Census Temps 3-Month Average ,000 Source: U.S. Bureau of Labor Statistics establishment survey NMHC Apartment Strategies/ Finance 3

4 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Initial Claims for Unemployment Insurance Benefits Market Update Initial unemployment claims now near pre-recession levels 700, ,000 Initial Unemployment Claims (SA) 500, , ,000 4-Week Average: 324,750 Week of May 3: 319, ,000 NMHC Apartment Strategies/ Finance Source: U.S. Department of Labor 4

5 Year-Year Change in Employment (000) (April y-y) 2014 Market Update More and more Young Adults are finding jobs 1,500 1, ,000-1,500-2,000 Source: U.S. Bureau of Labor Statistics household survey NMHC Apartment Strategies/ Finance 5

6 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan Multifamily Units (monthly data, annualized, 000) Market Update 400 Are total 5+ starts at or near their peak? Big jump in late 13, but eased in 1Q14 Monthly Starts Rate Annualized, SA 3-Month Annualized Starts Rate 300 Mar-14: 305k Mar-14: 292k Source: U.S. Department of Commerce; NMHC Apartment Strategies/ Finance 6

7 1Q92 1Q93 1Q94 1Q95 1Q96 1Q97 1Q98 1Q99 1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 5+ Rental Starts, trailing 12 months NAHB Expected Starts Index (average of market-rate and affordable, 2001=100) Apartment Starts As costs rise and equity capital looks beyond apartments, U.S. 5+ rental starts should peak in 2014 but stay active 300, , Rental Starts k , ,000 NAHB Expected Starts, Lagged 6 Quarters , , NMHC Apartment Strategies/ Finance Source: 7

8 Rental Apartment Units Market Outlook Demand and net completions ~ in balance through , ,000 Net Absorption New Completions 200,000 Net Completions 100, , , ,000 NMHC Apartment Strategies/ Finance Source: 8

9 1Q95 1Q96 1Q97 1Q98 1Q99 1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 Occupancy Year-Year Effective Rent Growth Market Outlook sustaining occupancy above trend, and also rent growth 100% 10% 95% 5% 90% 0% 85% -5% Equilibrium Occupancy Occupancy Occupancy Forecast Rent Growth Rent Growth Forecast Source: NMHC Apartment Strategies/ Finance 9

10 1Q94 1Q95 1Q96 1Q97 1Q98 1Q99 1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 Rent Affordability Index (normal rent share of household income/current share) Market Outlook Rent increases stretching budgets, contributing to slower rent gains Rent Affordability Index (par = 1.00) NMHC Apartment Strategies/ Finance Source: 10

11 Market Advisory Services Comparison of Top 10 Rent Growth Markets: 2013, 2014, Differ? Axiometrics 1 Portland 7.8% 2 San Jose 7.6% 3 Oakland 7.4% 4 Denver 7.0% 5 San Francisco 7.0% 6 Miami 5.6% 7 Seattle 5.5% 8 Atlanta 5.2% A 9 Austin 5.1% 10 Houston 5.0% 1 Oakland 6.9% 2 San Jose 6.9% 3 Denver 6.8% 4 San Francisco 6.7% 5 Portland 6.6% 6 Seattle 6.3% 7 Austin 5.3% 8 Miami 5.0% 9 Houston 4.8% 10 Nashville 4.6% WA NMHC Apartment Strategies 11

12 Market Advisory Services Comparison of Top 10 Rent Growth Markets: 2013, 2014, Differ? 2014 Differ? Axiometrics 1 Portland 7.8% Miami 6.2% 2 San Jose 7.6% San Jose 5.8% 3 Oakland 7.4% Seattle 5.0% 4 Denver 7.0% Oakland 4.9% 5 San Francisco 7.0% San Francisco 4.3% 6 Miami 5.6% Phoenix 4.2% A 7 Seattle 5.5% Riverside 4.1% 8 Atlanta 5.2% A Atlanta 4.0% A 9 Austin 5.1% Houston 4.0% A 10 Houston 5.0% West Palm Beach 4.0% A 1 Oakland 6.9% Nashville 6.6% WA 2 San Jose 6.9% Seattle 6.6% 3 Denver 6.8% Oakland 6.3% 4 San Francisco 6.7% San Francisco 5.9% 5 Portland 6.6% Sacramento 5.5% WA 6 Seattle 6.3% Portland 5.4% WA 7 Austin 5.3% Riverside 5.1% 8 Miami 5.0% Los Angeles 4.9% WA 9 Houston 4.8% Miami 4.5% 10 Nashville 4.6% WA San Jose 4.4% NMHC Apartment Strategies 12

13 Market Advisory Services Comparison of Top 10 Rent Growth Markets: 2013, 2014, Differ? 2014 Differ? 2016 Differ? Axiometrics 1 Portland 7.8% Miami 6.2% Chicago 4.5% A 2 San Jose 7.6% San Jose 5.8% Baltimore 4.3% A 3 Oakland 7.4% Seattle 5.0% Orange County 4.2% A 4 Denver 7.0% Oakland 4.9% Fort Lauderdale 4.1% A 5 San Francisco 7.0% San Francisco 4.3% San Jose 4.1% 6 Miami 5.6% Phoenix 4.2% A Raleigh 4.0% A 7 Seattle 5.5% Riverside 4.1% Denver 4.0% A 8 Atlanta 5.2% A Atlanta 4.0% A Washington DC 3.9% A 9 Austin 5.1% Houston 4.0% A Cincinnati 3.8% 10 Houston 5.0% West Palm Beach 4.0% A Seattle 3.7% 1 Oakland 6.9% Nashville 6.6% WA Cincinnati 4.7% 2 San Jose 6.9% Seattle 6.6% Salt Lake City 4.4% WA 3 Denver 6.8% Oakland 6.3% Fort Worth 4.3% WA 4 San Francisco 6.7% San Francisco 5.9% Austin 4.3% WA 5 Portland 6.6% Sacramento 5.5% WA Minneapolis 4.3% WA 6 Seattle 6.3% Portland 5.4% WA San Jose 4.2% 7 Austin 5.3% Riverside 5.1% San Antonio 4.1% WA 8 Miami 5.0% Los Angeles 4.9% WA Los Angeles 3.8% WA 9 Houston 4.8% Miami 4.5% Seattle 3.6% 10 Nashville 4.6% WA San Jose 4.4% New York City 3.6% WA NMHC Apartment Strategies 13

14 Market Advisory Services Comparison of Top 10 Rent Growth Markets: 2013, 2014, 2016 Markets in Common 2013 Differ? 2014 Differ? 2016 Differ? Axiometrics 1 Portland 7.8% Miami 6.2% 2 San Jose 7.6% San Jose 5.8% 3 Oakland 7.4% Seattle 5.0% 4 Denver 7.0% Oakland 4.9% 5 San Francisco 7.0% San Francisco 4.3% San Jose 4.1% 6 Miami 5.6% 7 Seattle 5.5% Riverside 4.1% 8 9 Austin 5.1% Cincinnati 3.8% 10 Houston 5.0% Seattle 3.7% 1 Oakland 6.9% Cincinnati 4.7% 2 San Jose 6.9% Seattle 6.6% 3 Denver 6.8% Oakland 6.3% 4 San Francisco 6.7% San Francisco 5.9% 5 Portland 6.6% 6 Seattle 6.3% San Jose 4.2% 7 Austin 5.3% Riverside 5.1% 8 Miami 5.0% 9 Houston 4.8% Miami 4.5% Seattle 3.6% 10 San Jose 4.4% NMHC Apartment Strategies 14

15 Market Advisory Services Comparison of Top 10 Rent Growth Markets: 2013, 2014, 2016 Market Differences 2013 Differ? 2014 Differ? 2016 Differ? Axiometrics 1 Chicago 4.5% A 2 Baltimore 4.3% A 3 Orange County 4.2% A 4 Fort Lauderdale 4.1% A 5 6 Phoenix 4.2% A Raleigh 4.0% A 7 Denver 4.0% A 8 Atlanta 4.0% A Washington DC 3.9% A 9 Houston 4.0% A 10 West Palm Beach 4.0% A 1 Nashville 6.6% WA 2 Salt Lake City 4.4% WA 3 Fort Worth 4.3% WA 4 Austin 4.3% WA 5 Sacramento 5.5% WA Minneapolis 4.3% WA 6 Portland 5.4% WA 7 San Antonio 4.1% WA 8 Los Angeles 4.9% WA Los Angeles 3.8% WA 9 10 New York City 3.6% WA NMHC Apartment Strategies 15

16 Urban Core Rent Growth July 2011 (U.S. Peak) Urban submarkets averaged > 6% annual effective rent growth. Source: Axiometrics Inc. ERG is Effective Rent Growth 2014 AXIOMETRICS INC. ALL RIGHTS RESERVED. 16

17 Urban Core Rent Growth March 2014 The average has dropped to 1.8%, which is below the U.S. benchmark of 3.1%. Source: Axiometrics Inc. ERG is Effective Rent Growth 2014 AXIOMETRICS INC. ALL RIGHTS RESERVED. 17

18 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 National Effective Rent Growth by Submarket Type Urban core submarkets are currently underperforming suburban submarkets, but they significantly outperformed earlier in the recovery/expansion period. 10.0% Annual Effective Rent Growth 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% Source: Axiometrics Inc. -8.0% Urban Core Suburban 2014 AXIOMETRICS INC. ALL RIGHTS RESERVED. 18

19 Variance in Annual Rent Growth by Submarket July 2011 (U.S. Peak) Most urban cores were strong Source: Axiometrics Inc. Each circle represents an individual submarket AXIOMETRICS INC. ALL RIGHTS RESERVED. 19

20 Variance in Annual Rent Growth by Submarket March 2014 (Current) Urban cores have weakened Source: Axiometrics Inc. Each circle represents an individual submarket AXIOMETRICS INC. ALL RIGHTS RESERVED. 20

21 Deliveries are up in both the Urban Core and the Suburbs 35,000 Apartment Units Delivered By Quarter Top 10 Markets 30,000 25,000 20,000 15,000 10,000 5, Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 Source: Axiometrics Inc. Urban Core Suburban Based on Top 10 Markets for units delivered in 2014: Atlanta, Austin, Charlotte, Dallas, Denver, Houston, Los Angeles, New York, Seattle, and Washington, DC AXIOMETRICS INC. ALL RIGHTS RESERVED. 21

22 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 New Urban Core Construction has Slowed There has been enough activity in the suburbs to keep the total number of starts at a consistent level since ,000 Apartment Units Started - Trailing Six Months Top 10 Markets 50,000 40,000 30,000 20,000 10,000 0 Urban Core Suburban Total Based on Top 10 Markets for units delivered in 2014: Atlanta, Austin, Charlotte, Dallas, Denver, Houston, Los Angeles, New York, Seattle, and Washington, DC AXIOMETRICS INC. ALL RIGHTS RESERVED. 22

23 Market Advisory Services Questions/Discussion NMHC Apartment Strategies 23